be performed from an examiner’s or investigator’s
desk without any hint to the mortgage lender
that there may be a possible fair lending concern.

Further, the richness of the new information that
will be available to an off-site analyst because of
the Final Rule may result in a conclusion that the
typical business justifications that are allowed to be
made by a mortgage lender when a possible loan-level disparity is identified during the course of an
examination or investigation are not necessary for
a proper analysis. Consequently, the regulator’s or
agency’s own arguments can be fully formulated and
developed without asking for the mortgage lender’s
own view on a particular lending decision or lending
pattern. As anyone who has been in an examination
or investigation situation knows, once a regulator
or an agency has made up its mind, it is much more
difficult to persuade them otherwise. On this note, it
is critical that each mortgage lender carefully scrub
its data set prior to submission, as inaccurate LAR
data will lead to inaccurate fair lending conclusions.

Despite the new challenges for mortgage
lenders, opportunities may still be found. The
expanded LAR data set required by the Final Rule
provides a sensible occasion for each mortgage
lender to better know its own data and to correct
institutional deficiencies on a prospective basis
prior to detection of past lapses by outside users
of the data, including regulatory and enforcement
agencies. Finally, depending on the extent and
substance of the public data set published by the
CFPB—a determination that has not yet been
announced—the availability of more data on
competitor’s underwriting and pricing schemes
may allow an institution to gauge the competition
and seek opportunities to differentiate its product
offerings and better compete in the marketplace.